Many sellers are caught off guard when they find out that there is more than just the agent's commission that they will be responsible for when selling their home. These additional costs can significantly impact the final amount a seller walks away with after the sale.
To protect yourself from unexpected financial shortfalls, it is crucial to have a clear understanding of all the potential expenses involved. Before listing your home, it is advisable to have a detailed discussion with your chosen property professional about these costs and ensure they are factored into your budget. Below, we take a comprehensive look at four main expenses that sellers commonly encounter when selling a property.
1. Bond Cancellation Fees
If your property is still bonded, you will be required to cancel the existing bond when you sell your home. This process comes with associated costs, known as bond cancellation fees. Each financial institution has its own set of rules regarding bond cancellations, including the applicable fees. Therefore, sellers must check with their bank or financial institution to find out the exact costs involved.
Most banks require a notice period of either 60 or 90 days before they can cancel the bond without imposing penalty fees. If this notice is not provided, the seller may face additional costs for early cancellation. To avoid unnecessary penalties, it is recommended that homeowners send a written notice to their bank as soon as they decide to put their property on the market. This proactive step ensures that when the property sells, the bond cancellation process is smooth and cost-effective.
Additionally, sellers should be aware that bond cancellation fees also include legal fees payable to an attorney appointed by the bank. This is because bond cancellations are handled by attorneys specializing in property law. The cost of bond cancellation attorney fees can range from R3,000 to R5,000, depending on the bank and legal firm involved.
Find out more about bond cancellation fees
2. Municipal Accounts and Clearance Certificates
Before the transfer of a property can take place, the seller must obtain a rates and taxes clearance certificate from the local municipality. This certificate serves as proof that all municipal accounts, including rates, taxes, water, and electricity bills, are up to date.
To issue this certificate, the municipality typically requires advance payment of rates and taxes covering a period of two to six months. This means the seller must pay for future municipal costs upfront. If the property registration process is completed in a shorter period, the municipality will refund the excess amount. However, the refund process can take several weeks or even months, depending on municipal processing times.
It is important for sellers to consider this cost when planning the sale of their home, as failure to pay the required amount could delay the transfer process. Consulting with a conveyancer or property professional can help sellers estimate the amount they need to set aside for municipal clearance fees.
Find out more about what happens to your electricity account after registration
3. Special Levies in Sectional Title Properties
For those selling a property within a sectional title complex or an estate with a homeowners’ association (HOA), there may be additional levies payable before the property transfer can take place. These levies are often required to cover outstanding contributions to the Body Corporate or HOA and ensure that communal property expenses are managed during the transfer process.
In many cases, sellers are asked to pay approximately three months’ worth of levies upfront. This helps cover the costs of maintaining the shared spaces and amenities while the sale is finalized. The exact amount required varies depending on the complex or estate’s financial management policies, so sellers should check with their Body Corporate or HOA to confirm the required payment.
Additionally, if any special levies have been implemented for major maintenance or upgrades within the complex, sellers may be responsible for settling their portion of these levies before the transfer is completed. This can be a significant expense, especially in estates that are undergoing major renovations or infrastructure improvements.
Find out more about special levies
4. Compliance Certificates and Repairs
Another essential requirement before a property can be transferred is obtaining various compliance certificates. These certificates confirm that the property meets legal and safety standards in key areas, including electrical systems, plumbing, gas installations, and pest control.
The types of compliance certificates required may vary depending on the location of the property and the specific installations present in the home. Some of the most common certificates include:
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Electrical Compliance Certificate (COC): This certificate verifies that the electrical wiring and installations in the home meet safety standards. An inspection by a qualified electrician is required, and if any faults are found, repairs must be carried out before the certificate can be issued.
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Plumbing Compliance Certificate: This ensures that the home’s plumbing system complies with municipal regulations and does not have major leaks or faults.
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Gas Compliance Certificate: If the home has a gas installation (such as a gas stove or geyser), a registered gas installer must inspect and certify that the installation is safe and compliant.
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Beetle Infestation Certificate: In some regions, particularly in coastal areas, a beetle certificate may be required to confirm that the home is free from wood-destroying pests.
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Electric Fence Compliance Certificate: If the property has an electric fence, it must comply with safety regulations, and a compliance certificate must be obtained.
The cost of obtaining these certificates depends on the condition of the property. If the inspections reveal issues, the seller is responsible for covering the cost of necessary repairs before the certificates can be issued. On average, compliance inspections and certificates can cost between R500 and R3,000 per certificate, but if significant repairs are required, the expenses can be considerably higher.
Find out more about compliance certificates
Selling a home involves more than just finding a buyer and paying an agent’s commission. Sellers must be financially prepared for various additional costs, including bond cancellation fees, municipal clearance certificates, special levies, and compliance certificates. By budgeting for these expenses in advance, homeowners can avoid last-minute surprises and ensure a smooth and efficient property transfer process.
If you are planning to sell your home, it is advisable to work with an experienced real estate professional who can guide you through the process and help you understand all the costs involved. Taking the time to plan ahead will help you maximize your profits and avoid unnecessary delays or financial stress during the sale.
